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Month: November 2018

The United Kingdom is becoming increasingly involved in blockchain technology and its potential for innovation. Two recent reports highlight the potential benefits of the technology. The main aim is to improve communication between government and citizens.

Blockchain technology and its potential for innovation and infrastructure improvement are the focus of recent reports. In its report “The Future of public service identity: blockchain”, the House of Lords pointed out that technology could change communication and the relationship of trust between government and citizens.

In the report, the initiators emphasize that blockchain technology can make digital identity projects much more secure. They compared four existing systems.

Four ways to manage the news spy

They have come to the conclusion that the news spy approach promises the least control by the user. In this approach, a single entity has control over the news spy and the digital identity. A second approach is the “federated” approach. Several interconnected entities control identities. This model is currently used by gov.uk.

With the user-centric approach, as used by the Estonian government, individuals or administrators can control identity across different authorities.

The use of blockchain would now allow governments to take a completely self-managed approach to digital identity. This would allow individual users to centrally control their identity and simultaneously synchronize it with different authorities and instances without losing control.

In this way, all processes involved could be organized decentrally, making it easier to synchronize data. This means that people who spend more time in different places can avoid having to go through the same processes to confirm their data. At the same time, the data remains secure.

The government that uses the technology can record all rules or laws in Smart Contracts. These are then executed each time by themselves – a high saving of bureaucratic effort. Identification then simply takes place via a smartphone app.

More innovation through Blockchain

A report by Lord Christopher Holmes highlights the implications of the technology, which can improve the country’s infrastructure. The report highlights the benefits in the public sector. These include the decentralised organisation of insurance, border control, taxation and healthcare.

Among other things, the report recommends the creation of interdepartmental initiatives in public services. It is proposed to launch pilot projects. In addition, an independent organisation should be set up to provide the necessary insurance and technical support.

A frequently mentioned problem is that ECDSA encryption can be cracked via quantum computers using this Shor algorithm. This is a very big problem, because the ECDSA encryption generates the public key from the private key. In order to crack an ECDSA encryption, the computational effort for determining a private key from a public key using the Shor algorithm would be reduced by a factor of 10^-34. Even a very slow computer, which can perform one calculation per second, would not even need two days to find the private key.

Is cryptosoft really insecure then?

What many people often overlook, however, is that in the case of Bitcoin there are two cryptosoft encryptions between the attacker and the private key. It is known that you have to determine a private key from a public key. This can be done as shown using the Shor algorithm. However, the attacker will normally not see the public key itself, but his hash. This hash is the wallet address.

Specifically, the following cryptographic processes interlock: From the 256-bit private key, a 512-bit public key can be generated via ECDSA encryption. A SHA256 algorithm converts this into a checksum, which in turn can be converted into the wallet address. The attacker does not only have to determine the private key from the public key. He must first generate the public key from the wallet address.

Hackers can in principle crack SHA256 using the Grover algorithm. However, this algorithm only achieves a quadratic acceleration. This means that an attack on a hash generated by SHA256 requires approximately 2^128 or 3.4*10^38 computing cycles. Currently the supercomputers of the world can process about 10^17 operations per second. This set is assumed to be the upper limit. In principle, it cannot be assumed that a so-called entangled state can be prepared again in such short time intervals after measurement processes have taken place. A quantum computer with so many Qubit operations per second would need only 107.9 trillion years instead of 4*10^52 years to find the Public Key. This is still much greater than the age of the universe!

Admittedly, there is another algorithm that promises a cubic runtime optimization. With this a quantum computer, in the case of 10^17 Qubit operations per second, could break the connection between wallet address and public key in 15 years.

Even under the assumption of a supercomputer that is currently physically impossible, and using a comparatively unknown algorithm, the cost of hacking would dramatically exceed the benefit.

What does Bitcoin do and what can you do?

It turns out: Bitcoin is comparatively quantum safe. Of course, this is only true as long as nobody develops a better algorithm than Grover for finding the public key. That’s why it’s still interesting to see whether Bitcoin developers even take up this question.

True to the motto “Be your own bank”, it would also be desirable if the individual Bitcoin user were not only crypto-fit, but quantum safe. In part two of this series of articles, we therefore discuss the possibilities we have for better protection of our Bitcoins.

The president of Venezuela Nicolás Maduro has proposed to the members of the ALBA-TCP trade pact to accept the crypto currency Petro, which he had planned. This serves the “courageous” and “creative” integration of the 21st century, Maduro tried to convince the governments of the ten other nations of his intention.

Meanwhile, the Venezuelan parliament announced that it would ban the Bitcoin formula

Last Friday, an extraordinary meeting of the Political Council of the Bolivarian Alliance for the Peoples of America (ALBA-TCP) was held in Caracas. This is both an economic and a political alliance consisting of a total of eleven states of Latin America and the Caribbean. The alliance, founded by Hugo Chávez, is intended to be an antithesis to the free trade area ALCA planned by the USA: https://www.onlinebetrug.net/en/bitcoin-formula/ At the end of the extraordinary meeting, Maduro proposed to the “brother governments” the integration of his planned crypto-coin Bitcoin formula. Maduro believes that his currency will replace all previous currencies that are already being traded. The head of state predicted the introduction within the next few days.

This declared the Petro in advance as illegal

The president, however, receives a strong headwind from the parliament, which is controlled by the opposition. In Parliament’s view, the new crypto currency should require approval because it is a form of debt collection. Each Petro-Coin should be deposited with a barrel of oil from Venezuela’s reserves. The opposition publicly frothed over the sale of the country’s fossil fuels. Opposition politicians were quoted in the press as saying that the petroleum also opens the door to corruption. The securities deposited would be void if the current head of state were to lose the next election. Even if Maduro can successfully circumvent the US sanctions with the help of the crypto currency, the ban should considerably reduce the attractiveness of the new coin for investors. Maduro hopes to raise $5.9 billion from the Petro to modernize the domestic economy.

Since Maduro’s defeat in the parliamentary elections there has been a real stalemate, paralysing the country. The Venezuelan President has repeatedly ignored the orders of the parliamentary majority because he is protected by the Constitutional Court, which repeatedly blocks the laws passed by Parliament. It is therefore still completely unclear at this stage whether the crypto-petro will come in the coming days. One thing is certain: If Maduros party wants to win the next elections, something must happen. The country is suffering from galloping inflation and a rapidly spreading shortage of food and medicines. It remains to be seen whether Petro will be able to lead the nation out of the deep crisis as hoped. Maduro twittered that the meeting of the ALBA-TCP states had strengthened “friendship and cooperation” between the nations. However, he did not comment on how his proposal was reacted to last Friday.